Office rents fall in West End, Manhattan and Tokyo

Office rental values in London’s West End, New York’s Manhattan and also in Tokyo fell in tandem for the third quarter of this year, something that has not occurred for almost seven years.

The aggregate office occupancy cost in the West End was nearly £140 per square foot for the year (Sept ‘07 – Sept ‘08) according to data from CBRE.

Much of the fall can be attributed to falling global demand for office space from banking institutions.  Rental values are set to continue to fall for the rest of this year and also in Q1 of 2009.

Raymond Torto of CBRE commented that “London’s West End or places that are showing declines right now are the leading edge of what’s going to happen the next six months, obviously.”

However, of 172 office space markets that CBRE monitor, the overall average showed an 8% increase in prices. One of the cities with the fastest growing rental values was Abu Dhabi, which experienced a 95% rise.

Another area where rental values are rising fast is in the Asia Pacific where the average increase was 26% in quarter 3 this year.

Torto explained the rapid increase in rental costs – “They’re new places for financial markets. They don’t have a lot of quality space, and the little bit that there is, is wildly bid up.”

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